Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 03-24-2015, 09:59 AM   #101
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,643
Good grief what a tiring thread. The most useful thing I got out of it was a re-look at the Bernstein calculator from hell piece. My impression from way back was that he had made some conservative prediction that reduced returns over the coming years would lead to worse results than are present in the historical record. But it is clear looking at the article that he is not. Basically he is saying that he thinks we are heading for a lousy 30 year run and uses 1966 as his benchmark. I.E., from a Firecalx perspective he is saying we should expect to be on some of the lousy scenarios. That still leaves us in the 4% SWR range for 100% FC success. It seems to me that most of the Firecalc proponents around here tend to start there and back off to lesser SWRs of 3-3.5% (or switch to variable withdrawal approaches) to accommodate the possibility that the future will be even worse than the worst of the past.
__________________

__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-24-2015, 10:08 AM   #102
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,094
Quote:
Originally Posted by donheff View Post
It seems to me that most of the Firecalc proponents around here tend to start there and back off to lesser SWRs of 3-3.5% (or switch to variable withdrawal approaches) to accommodate the possibility that the future will be even worse than the worst of the past.
+1

While the FIRECalc antagonists tend to start and perpetuate threads foreseeing the falling of our financial sky and proposing...?
__________________

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 03-24-2015, 10:33 AM   #103
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,971
Quote:
Originally Posted by donheff View Post
It seems to me that most of the Firecalc proponents around here tend to start there and back off to lesser SWRs of 3-3.5% (or switch to variable withdrawal approaches) to accommodate the possibility that the future will be even worse than the worst of the past.
Quote:
Originally Posted by REWahoo View Post
+1. While the FIRECalc antagonists tend to start and perpetuate threads foreseeing the falling of our financial sky and proposing...?
+2. But I don't want to be tiresome, I've already (over) explained my POV...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 03-24-2015, 10:38 AM   #104
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 1,660
Quote:
Originally Posted by ERD50 View Post
It can be replicated - X number of people with the same inputs, will get the same results. That's a 'known science'.
so does this mean any code that can take the same inputs in 'known science'? time independent code yes.
I think we would agree that firecalc is a useful tool that back tests the inputs based on historical data. As an engineer we would look at expected variations and worst case based on physical laws... not just historical tests. Honestly I don't know how financial science is defined... so the term for firecalc may be right... but because a code gives the same output with the same input has less to to with financial science than having a time independent code. And this does not require it to be correct in the first place, just repeatable.

It is kind of the difference of being precise and being accurate.
__________________
bingybear is offline   Reply With Quote
Old 03-24-2015, 11:06 AM   #105
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,467
Quote:
Originally Posted by Bestwifeever View Post
Why make a "withdrawal" if it then just gets parked in a different place?
A critically important point:

The funds in your retirement portfolio are subject to market volatility. Supposedly there is sufficient equity exposure in that portfolio to offset long term inflation.

The "place" short term funds are parked in should be protected from that same market volatility. That's in fact the whole point!
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is online now   Reply With Quote
Old 03-24-2015, 11:48 AM   #106
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 16,373
Quote:
Originally Posted by audreyh1 View Post
A critically important point:

The funds in your retirement portfolio are subject to market volatility. Supposedly there is sufficient equity exposure in that portfolio to offset long term inflation.

The "place" short term funds are parked in should be protected from that same market volatility. That's in fact the whole point!
But we have 10 percent of our retirement portfolio already in a money market fund protected from that same market volatility. So why withdraw and repark it?

ETA we also would have to pay tax on the withdrawal which might not be true for you.
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 03-24-2015, 12:43 PM   #107
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,467
Quote:
Originally Posted by Bestwifeever View Post
But we have 10 percent of our retirement portfolio already in a money market fund protected from that same market volatility. So why withdraw and repark it?

ETA we also would have to pay tax on the withdrawal which might not be true for you.
What is that money for? Is to rebalance the portfolio or to fund withdrawals? I think it's the former. You rebalance when you withdraw, right?

I prefer to be very clear about the purpose and time frame of each of my investments. Different time frames and investment purposes are managed separately. I'm not going to mix it up by having cash set aside for another purpose mixed into my AA calculation when I'm rebalancing my portfolio. I also don't include money set aside for some other purpose when I calculate my withdrawal.

No, I don't pay taxes for withdrawing cash.

Money that I don't spend - if I put in back in my retirement fund, I would consider that subject to the same 55/40/5 equities/bonds/cash AA volatility as the rest of my portfolio. Otherwise I would have to recalculate my AA with a larger cash allocation so I don't accidentally rebalance and dip into it too much. I simply choose not to do it that way.

I can see limiting withdrawals from an IRA to spending as it means less taxes (now). In that case I would track different "kitties" using a spreadsheet.
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is online now   Reply With Quote
Old 03-24-2015, 04:41 PM   #108
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,278
Quote:
Originally Posted by bingybear View Post
Quote:
Originally Posted by ERD50 View Post
It can be replicated - X number of people with the same inputs, will get the same results. That's a 'known science'.
so does this mean any code that can take the same inputs in 'known science'? time independent code yes. ...
Mathematics is a science. Computer programming is a science. That is what the historical reporters are.


Quote:
I think we would agree that firecalc is a useful tool that back tests the inputs based on historical data.
Yes - and that is all it is! It even says so in the description!

Quote:
As an engineer we would look at expected variations and worst case based on physical laws... not just historical tests. Honestly I don't know how financial science is defined... so the term for firecalc may be right... but because a code gives the same output with the same input has less to to with financial science than having a time independent code.
And here again, I think you are assigning something outside of its design criteria, and then claiming it doesn't work! How come my toothbrush won't backup my computer!

FIRECalc isn't designed to anticipate what would happen if the Feds raise interest rates for example, or any other calculation that an economist might ponder. It simply reports what has happened.


Quote:
And this does not require it to be correct in the first place, just repeatable.
Except with public data, one can test for themselves if the output is correct. It is determinate.


Quote:
It is kind of the difference of being precise and being accurate.
No, it really isn't.

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 03-24-2015, 05:30 PM   #109
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 16,373
Quote:
Originally Posted by audreyh1 View Post
What is that money for? Is to rebalance the portfolio or to fund withdrawals? I think it's the former. You rebalance when you withdraw, right?

I prefer to be very clear about the purpose and time frame of each of my investments. Different time frames and investment purposes are managed separately. I'm not going to mix it up by having cash set aside for another purpose mixed into my AA calculation when I'm rebalancing my portfolio. I also don't include money set aside for some other purpose when I calculate my withdrawal.

No, I don't pay taxes for withdrawing cash.

Money that I don't spend - if I put in back in my retirement fund, I would consider that subject to the same 55/40/5 equities/bonds/cash AA volatility as the rest of my portfolio. Otherwise I would have to recalculate my AA with a larger cash allocation so I don't accidentally rebalance and dip into it too much. I simply choose not to do it that way.

I can see limiting withdrawals from an IRA to spending as it means less taxes (now). In that case I would track different "kitties" using a spreadsheet.
I know DH and I are the least scientific and two of the most unsophisticated investors on these boards, so I realize we have different investment, withdrawal, and spending styles, Audrey. All is good
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 03-25-2015, 10:56 AM   #110
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: Following the nice weather
Posts: 6,428
Quote:
Originally Posted by ERD50 View Post
And here again, I think you are assigning something outside of its design criteria, and then claiming it doesn't work! How come my toothbrush won't backup my computer!
I'm sure there's a relatively simple hack that would make that work, Philips Sonicare DiamondClean Toothbrush charges via rinsing glass or USB
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers, or maybe Sam Clemens
DW and I - FIREd at 50 (7/06), living off assets
harley is offline   Reply With Quote
Old 03-25-2015, 12:24 PM   #111
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 1,660
Quote:
Originally Posted by ERD50
Mathematics is a science. Computer programming is a science. That is what the historical reporters are.
Quote:
As an engineer we would look at expected variations and worst case based on physical laws... not just historical tests. Honestly I don't know how financial science is defined... so the term for firecalc may be right... but because a code gives the same output with the same input has less to to with financial science than having a time independent code.
Quote:
Originally Posted by ERD50
And here again, I think you are assigning something outside of its design criteria, and then claiming it doesn't work! How come my toothbrush won't backup my computer!
My post was asking how firecalc is a science. you state because the program gives the same output for the same inputs for different people it is a known science'. My comment above was not to say that firecalc should do... but what I would expect of a science program.
I'm not trying to understand the term science from your argument. Because you get the same outputs from the same inputs makes firecalc a known science... would most computer programs not fit this definition?

The question is not what firecalc can do or should do... but what makes it a science? As I stated, I don't know how financial science is defined. I may just be missing that piece. Now if it because it is based on Computer science... that is being a program.... then is this forum a science?
__________________
bingybear is offline   Reply With Quote
Old 03-25-2015, 06:54 PM   #112
Full time employment: Posting here.
gcgang's Avatar
 
Join Date: Sep 2012
Posts: 925
http://youtu.be/-FIMvSp01C8

SCIENCE!!!


Sent from my iPad using Early Retirement Forum
__________________
In theory, there's no difference between theory and practice. In practice, there is. YB
gcgang is offline   Reply With Quote
Old 03-25-2015, 09:40 PM   #113
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,278
Quote:
Originally Posted by bingybear View Post
...
The question is not what firecalc can do or should do... but what makes it a science? As I stated, I don't know how financial science is defined. I may just be missing that piece. Now if it because it is based on Computer science... that is being a program.... then is this forum a science?
I guess I'm just not following what distinction you are after, or why.

It seems clear what FIRECalc does - you provide inputs, it performs a series of computations on historical data and presents the data. It does it the same each time.

What does that have to do with any sort of 'financial science' and why does it matter?

But FWIW - from wiki:

Quote:
Applied mathematics is a branch of mathematics that deals with mathematical methods that find use in science, engineering, business, computer science, and industry. Thus, "applied mathematics" is a mathematical science with specialized knowledge.

Quote:
Originally Posted by gcgang View Post
YOU BLINDED ME!!!

Thanks, I needed that, hadn't heard it in a long time (well, a little goes a long way )

-ERD50
__________________

__________________
ERD50 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Maximum 401(k) contribution rises to $17,000 in 2012 Helen FIRE and Money 11 11-13-2011 06:01 PM
OPEC Increases Quotas, Crude Oil Price Rises haha FIRE and Money 0 09-11-2007 02:16 PM
Dollar rises, profits fall...? Caroline FIRE and Money 2 06-14-2005 05:57 PM
Online Survey Marketing--B.S. or Legit? Tommy_Dolitte Young Dreamers 3 10-12-2004 03:11 PM

 

 
All times are GMT -6. The time now is 12:42 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.